Clearly, you want to be sure your investments are legally documented in such a way that you are protected, right? Of course, you do. Passive real estate investments are no different.
For decades, people have sought mortgages from lenders, usually banks or high-powered lenders to pay for a home. The mortgage is just a legal document stating that the person will pay the lender back the principle plus interest. Mortgages still exist today.
Another legal vehicle has come into use for real estate financing that is known as a "trust deed". This is the legalese term for the papers that create the most common form of contract for passive real estate investing. It streamlines the legal process if they do not receive the agreed-upon payments and interest - profits- on time. The trust deed includes a power of sale clause that allows the property to be liquidated quickly should payments stop. Unlike private mortgages, there are no worries about your capital being tied up for years in court if there were ever a default.
Next Post: Closing Thoughts
No comments:
Post a Comment